Seven people have been killed and 21 injured after a race car ploughed into spectators at a motor event in Sri Lanka.

The crash occurred at the Fox Hill Supercross race on Sunday in Diyatalawa, an army base town.

Among the dead were four race officials as well as spectators, including an eight-year-old girl, the army said.

Police have arrested two drivers, though their condition remains unclear.

Authorities said a full police investigation was underway into the crash on the army-owned track. Diyatalawa, in central southern Sri Lanka, is a former garrison town and the military maintains an academy there.

"This accident happened when the car jumped out of the running lane," police spokesman Nihal Talduwa was quoted by BBC Sinhala as saying.

According to witnesses, the crash happened soon after another car had overturned on the track.

Officials tried to slow cars down around the scene by waving yellow lights, but as the cars sped past, one red car veered off course and crashed into spectators on the side of the unguarded track.